Is it permissible to participate in an Islamic Tawarruq loan with a colleague, where the loan is in the colleague's name and all dealings with the bank are conducted by him, while the value of the loan and its repayment are shared between both parties?
Your question encompasses two matters:
First: The ruling on Tawarruq (monetization), which is permissible according to the majority of scholars if it adheres to the -compliant controls. Some, however, disliked or prohibited it.
Second: The ruling on your partnership with your colleague in the debt and its repayment. There is no harm in this, but it is important to note that there are two transactions: The first is between the bank and your colleague (a contract), and the second is between you and your colleague. For the second transaction to be valid, your colleague must assign half of the commodity to you after purchasing it from the bank and before selling it. Otherwise, he would be selling what he does not own, or lending to you with interest, which is precisely Riba (usury).
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- 59188
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